US crude climbs 3.3% to 7-week closing high of $47.89 after Saudis vow to cut exports

Oil prices rose to a seven-week high on Tuesday after Saudi Arabia pledged to curb exports next month and OPEC called on several members to boost compliance with output cuts to help rein in oversupply and tackle flagging prices.

Global benchmark Brent crude for September delivery was up $1.63, or 3.4 percent, at $50.23 a barrel by 2:35 p.m. ET (1835 GMT) after touching a seven-week intraday high.

At a meeting in the Russian city of St. Petersburg on Monday, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers discussed extending their deal to cut output by 1.8 million barrels per day (bpd) beyond March 2018 if necessary.

Saudi Energy Minister Khalid al-Falih added his country would limit its crude exports to 6.6 million bpd in August, almost 1 million bpd below levels of a year ago.

Nigeria voluntarily agreed to join the deal by capping or cutting its output from 1.8 million bpd, once it stabilizes at that level. Nigeria, which has been producing 1.7 million bpd recently, had been exempt from the output cuts.

In a sign that production from the OPEC member remains susceptible to disruptions, Royal Dutch Shell’s Nigerian subsidiary said on Monday that it had shut its 180,000 bpd Trans Niger pipeline because of a leak on July 21.

Ministers at the meeting also highlighted the importance of compliance.

Russian Energy Minister Alexander Novak said an additional 200,000 bpd of oil could be removed from the market if there is 100 percent compliance with the OPEC-led deal.

OPEC said that stocks held by industrial nations had fallen by 90 million barrels in the first six months of the year but were still 250 million barrels above the five-year average, which is the target level for OPEC and non-OPEC members.

U.S. commercial crude oil inventories likely fell by 3 million barrels last week, a preliminary Reuters poll showed ahead of a data release from the American Petroleum Institute.

“The general consensus around the campfire is that you’re going to get sizeable draws in crude and gasoline,” said Robert Yawger, director of energy futures at Mizuho Americas.

A weaker dollar is also supporting crude prices, Yawger said.

On Monday, Anadarko Petroleum posted a larger-than-expected quarterly loss and said it would cut its 2017 capital budget by $300 million because of depressed oil prices, the first major U.S. oil producer to do so.

Earlier, Halliburton‘s executive chairman said growth in North America’s rig count was “showing signs of plateauing.”

“Companies are not drilling as fast they had been in the beginning of 2017,” said Mark Watkins, regional investment manager at U.S. Bank.

China’s crude imports will exceed 400 million tons (8 million bpd) this year and likely grow by double digits next year, a Sinopec Group executive said.

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